Mortgage Insurance


Having this mortgage default insurance policy in place allows the lender to fund a mortgage with as little as 5% down payment. Without this insurance protection, the banks would never take on that much risk and you’d need a 20% down payment to purchase a home.

Mortgage default insurance provides insurance to the lender in case you default on your mortgage. You are required to purchase mortgage default insurance if you put down less than 20% for your down payment. When someone refers to an insured mortgage, this is what they are talking about.

So, do I need mortgage default insurance?

The long and short of it is – If your down payment is less than 20% of the purchase price, you will have to purchase mortgage default insurance. Don’t worry, your mortgage broker will explain all of this.

How much does mortgage default insurance cost?

The cost of the policy differs a bit depending on who your insurance was purchased from.

There are 3 insurance companies that provide mortgage default insurance in Canada:


This is an insurance policy that the lender will try to sell you when getting a mortgage. It will pay off your mortgage in case of your death.

Having some sort of life insurance is important if you are a home owner.  I would suggest buying a standard life insurance policy from a separate insurance company, rather than mortgage life insurance.

The reasons for this are:

  • With a standard life insurance policy, the amount payable upon your death does not decrease over time
  • With mortgage life insurance, the policy will pay off the balance of your mortgage upon death. Therefore, the amount payable upon your death decreases with every mortgage payment you make

Contact Rachel McLean for a standard life insurance policy.

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